It’s all about money

February 23, 2012

This next week is known as "funnel week", which means that those policy bills that involve funding need to be out of committee next week. Several important policy bills will be decided upon and begin the political process toward ultimate passage of both houses and the Governor's signature. The House, right now, is doing some heavy lifting in working with proposals in education, mental health redesign, and property tax reform. All of these changes involve additional state support to allow them to happen. That means that we must pass a state budget that meets the principles of responsible state budgeting.

These principles include:

1) The budget should not spend more dollars than our state takes in. Hardworking Iowa taxpayers have to tighten their belts and they deserve a Legislature that has the same mindset.

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2) Using one-time dollars for ongoing expenses is not responsible, is not sustainable and is not acceptable. We must continue to wean ourselves from using one-time dollars, which is precisely what got us into our fiscal mess just a few years ago.

3) Leave enough in the saving account to plan for the future. Just because we may have some additional dollars, does not mean we automatically have to spend it. We need to plan for the future and be ready in case of emergencies.

4) Let's be transparent and accountable. Iowans want their priorities funded but they do not want to see politicians utilizing gimmicks to mislead or deceive. We should be straightforward and honest that's what the hardworking taxpayers of Iowa deserve.

Budget targets for the House and Senate were released last week.

House and Senate Republican budget targets appropriate $6.059 billion from the general fund and $106 million from the Health Care Trust Fund (HCTF). The Governor appropriates $6.244 billion from the General Fund and $106 million from the HCTF. (The $106 million is the same amount for the HCTF as FY 2012.) Both of these amounts represent a figure that is lower than ongoing general fund revenue.

The Senate Democrat's target appropriates $6.218 billion from the general fund. While this appears to be $25 million less than the Governor, in reality it is $88 million more than the Governor because the Senate Democrats recommend taking an additional $113 million of tobacco tax revenue and transferring it to the HCTF. The transfer reduces ongoing revenue from $6.251 billion to $6.134 billion.

Each of the House budget chairs have to design a budget that complies with the overall target. This year Ag & Natural Resources actually achieved an increase in their budget, after years of cutting it. The increase was $1,635.500 above the FY 2012 level. This is a good thing, as Secretary of Agriculture Bill Northey has been forced to drastically cut staff in recent years. It was at the point now where he was unable to comply with state law on inspections.

The bill proposes to appropriate $35.7-million of general fund moneys that meets the House Republican budget target for this budget of $18.1-million to the Iowa Department of Agriculture and Land Stewardship (IDALS); $13.9-million to Iowa Department of Natural Resources (DNR) and $3.4-million to Iowa State University Diagnostic Laboratory.

Negotiating a budget is much like a person buying a car. One never pays the asking price, but begins with an offer. Over a period of time, both parties will come to an agreement and each will have made a concession. It's the getting to that amount and addressing each other's needs and wants that makes this process so difficult. These numbers represent people; these numbers represent those in need of assistance and services; these numbers represent the people who are employed to provide those needs and services. When we sit down and negotiate, these are the things that are on our minds.

Where will the House and Senate find that common ground between us? I'm not quite sure at this point. One thing I do know is that the House will never recognize a budget that is funded more than the revenue we are estimated to receive. The law requires that we spend only 99% of the projected revenue based on the REC number determined last December. At the present time, the House Republican budget target is $192 million under that amount. The Governor's budget of $6.244 billion is $7 million under the Revenue Estimating Conference estimate. The Senate is $84 million over the estimate and we are $276 million apart.

My guess is that in the coming weeks we will end up probably close to the Governor's level. One thing I do know for sure, is that the House will never agree to a number that is more than the estimated ongoing revenue. That is the line we draw in the sand. I am confident that we can find common ground with the Senate and avoid the lengthy session that we experienced last year.

I am always happy to deal with any requests you may have or any input you may offer! Please contact me at 515-281-3221 or betty.deboef@legis.state.ia.us.